In the past eight years, Nubank has grown from zero to over 70 million customers. A company built in a small house in São Paulo, Brazil, has become the largest digital bank in the world. The key to this growth has been building products that weren’t only better than their competitors, but fundamentally different.
This doesn’t mean we try to be different for the sake of being different. It means each product needs to address customer’s underlying needs, based on a deep understanding of that customer. We want to solve problems our customers really care about, in order to build lasting, emotional connections with them.
Some of our earliest products may look relatively undifferentiated today. In 2014, however, a fee-free credit card based entirely on a mobile app, with no access to a brick-and-mortar branch, changed the game in Brazil.
Offering solutions which are fundamentally different from the alternative is core to our value proposition and our brand. This is why we’ve been able to drive rapid adoption and high engagement while extending our product portfolio and geographic footprint.
Solve the right problems
First of all, we need to know precisely who we’re building the product for. From the beginning we were focused on a well-defined segment of the population: millennial, middle-class, urban Brazilians, who are early adopters of smartphones with limited access to credit.
Brazil’s population is close to 215 million people, and that initial segment comprises more than 70 million people. In becoming the world’s largest digital bank, we expanded over time to appeal to a wider customer base, but we designed our products to appeal to those customers first.
Next, we tried to understand their needs, pains, and aspirations based on observed data. We explicitly identify the assumptions in the insights we develop: if we can’t immediately validate them, it’s important to recognize where we are making assumptions, and how we could prove or disprove them in future.
We call problems that really matter to customers ‘sharp pains.’ Think about the pain you’d feel if you sat on something sharp – a thumb tack: you react fast, you jump up immediately. No one has to persuade (or ‘sell’) you. Now imagine the opposite: a ‘dull’ pain. An uncomfortable chair is annoying, but you’ll reposition yourself every few minutes to put up with it rather than jumping to your feet. When you solve sharp pains, customers react fast – and your product grows quickly.
If we started out by looking at our competitor’s products and thinking of ways to be slightly better, we would bypass the critical steps of assessing assumptions any current solutions make, observing customer behavior rather than relying on what they say, and validating our hypotheses with data.
Solving the wrong problem is a bigger risk than building a suboptimal solution. It’s a waste of time and resources, and it can harm the emotional connection we seek to develop and maintain with customers. To be clear, the success of a competitor’s product can be a useful signal that there’s a customer need worth investigating. We believe that we have to go deep in the details of the customer’s experience to ensure that our approach is resilient, and our solution delivers lasting value.
Principle-driven products drive customer love
We’ve learned to apply a set of principles to our product development process for every product we build. Starting with customers and solving sharp pains is one of these. So is challenging assumptions and depending on observed data. A third, equally important principle is intellectual honesty. We need to be willing to be wrong. It isn’t hard to fall in love with an idea or solution – but if the customer doesn’t also fall in love with it, we need to be ready to move on. We have to be very clear up front about what success will look like, and also what failure will look like. High adoption with low engagement isn’t a win: but without a clear benchmark for ‘high’ and ‘low’ you can be tempted to accept lower standards.
Sticking to these principles gives us confidence that we’re going to be successful in the long run. Some experiments will fail, but we lower the risk that those failures will be material, and we make sure we live up to customer expectations of our brand even if the product isn’t exactly what they need.
By adhering to these principles, we’re aiming not for customer satisfaction but for customer love. Profit comes second: if customers love a product, and it generates real value for them, there will always be a way to capture our fair share of that value. Generic products, on the other hand, have to work extra hard to generate a return. That extra hard work is often costly, and impacts the economics of your business.
Company problems are not customer problems
If you start out by asking “how do we increase profits?” you’ll build products which solve problems for the company and not the customer. It takes discipline to avoid this mistake, particularly if your business is facing pressure to grow faster or monetize more effectively. There will be many temptations disguised as opportunities in the short-term. Recognizing that we want our customers to love our products over the long-term helps identify ‘false hopes’.
Building products in an ever-changing economic environment
Nubank has never really known anything but tough macroeconomic times. Since the first product launched in 2014 we’ve faced the deepest recession in 100 years, plus a global pandemic. We believe that hard economic times can be a fertile environment for great innovation. There are many potential explanations for this. When resources are limited, you have to get creative. When companies are cutting back, hard-to-find talent becomes available. Customers also have a greater need for certain types of products. The value of help with your finances is higher when the pressures on those finances is greater.
Latin America has faced economic volatility for generations. This can make building and operating a business harder in some ways, but it also creates opportunities for those who are willing to innovate.
We’re looking for people who can distinguish between how things have always been done and how they could be. Can you separate sharp pains from dull ones? Can you turn down a quick financial win for a long-term customer relationship?
If the answer to these questions is yes, come join us. Help us reshape financial services into something customers can love.